Category

Frugal Living

Credit Cards, Frugal Living, Lifestyle

Credit Card Secrets






We think of credit cards as those things which allow us to manage our financial lives without carrying money around. Bills are easy to automate with credit cards and paying the card at the end of the month is a simple, one-time, setup online and it is paid in full on the due date without any further action on your part. Even if you don’t record your spending, a credit card has a nice list of all your spending in one neat, compact location for future review.

Those crisp pieces of plastic come with a dark side also. Without constraint, you can dig a financial hole difficult to crawl out of. Make no mistake; credit cards are debt, even if you pay them in full monthly. Debit cards serve the same purpose and are not debt because it comes out of your bank account; when the money runs out, the purchases are declined.*

Previous posts discussed bonuses, cash-back credit cards, and interest free/fee free loans. I consider those the easy benefit of credit cards. Debit cards offer limited bonuses and cash back, but credit cards take it to a whole new level.

There are a lot more benefits to credit cards most people either don’t know about or never take advantage of. I seek to end that problem now. These benefits are worth anywhere from a few hundred dollars a year to thousands, depending on your level of spending and the items/services purchased with the card.Continue reading

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Hidden Value in Homeowners Insurance

img_20161031_201350Insurance is for the mathematically challenged. Insurance companies have the largest buildings in town for a reason. What other company do you write a check to for a thousand dollars and get nothing more than a promise to cover some bills in the event of certain losses? Commissions to the salesperson can reach or exceed 100% of premiums in the early years of some life insurance policies. Many credit card companies offer free extended warranty insurance at no additional cost when you buy with their card. You can guess the real value of the extended warrantee offered at Wal-Mart on $88 headphones.

Warren Buffett built an empire funded by insurance premiums at Geico. Some insurance is required by law. In the U.S., auto insurance is required for liability. Health insurance is also required since the Affordable Care Act passed.

Insurance is about risk management. Insurance companies are masters at it. The goal for the insurance company is to bring in as much as possible in premiums and pay out as little as possible in claims. Insurance always has a built-in profit for the insurance company. This is the house advantage.

Most insurance claims are for stupid small stuff. The cost of insurance to cover claims under $10,000 is massive. The processing of a claim is expensive. That is why higher deductible can save so much. But even better is not buying insurance at all and pocketing the cash.


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Lessons Learned: Raising Children with Disabilities




Ice creamIn the winter of 1995 Mrs. Accountant and I were a young married couple anxiously awaiting our first child due in late February. Winter in NE Wisconsin has a tendency to get bitter. The winter in question was no different. The holidays were still fresh in our mind on January 7th. My business was a remodeled basement; the following year would be my first with a store front.

The air felt colder than normal and Mrs. Accountant was feeling the effects. The stress of pregnancy coupled with the weather had her bed-ridden. Early on the 7th she got up and wandered to the couch. Then the world turned upside down. Her water broke seven weeks early. Dumb as I was I still knew this was really bad.

I rushed Mrs. Accountant to the hospital. The doctor decided the longer the baby stayed in mom the better. For two days my wife suffered. The doctor finally relented and had Mrs. Accountant transferred to a hospital with facilities for such a premature baby.

It was an intense delivery. I was not allowed in the delivery room. Our first baby entered the world seven weeks early and spent 19 days in intensive care. If I had not worked out of my home at the time I would have never stayed in business. Working from home allowed me all day with my wife and newborn daughter.

The medical problems were only beginning.

Chapter 2

Five years later Mrs. Accountant and I decided we wanted one more child. Two seemed like a good number and we had it in our heads if we only had one child she would be spoiled. (We spoiled her anyway, with love.)

The doctors were taking no chances this round. The ultra sounds were all normal; all tests were normal. It did not matter to Mrs. Accountant and me the gender of our child so we waited for our baby to enter the world to know.

Shortly before the due date the doctor decided a C-section was the safest course. This time I was allowed in the delivery room. The operation went smooth. As the baby slid from mom’s belly one doctor said, “Congratulations, sir. You have a son.” Another doctor said, “Look again doctor. You have a girl, sir.” All I remember was muttering, “It’s both.” The room was silent the remainder of the procedure.


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Raising Kids in a Low Spending Environment

img_20161015_103817The TV blares ad after ad with million dollar budgets to maximize sales with each commercial. The school has one project after another for parents to fund. Your children can’t get away; neither can the you. When parents are financially responsible, advertisers and the school system work on your children to get your money. Even your child’s allowance is at risk. Anything to pry money away from you is acceptable practice. It wears you down. All the work teaching your children good money skills is wasted in the never-ending assault.

And don’t count on teachers helping you or your children either. Your kid’s teacher is broke. Without a guaranteed government pension most teachers would be homeless after retirement. Teachers can’t teach what they either don’t know or refuse to practice. Your kids will never learn money skills in school because the teachers are broke and don’t know how to handle money. Period. The school system is the opposite of responsible spending. The school system constantly looks for additional ways to get your money. Great lessons they are teaching our kids. No wonder people work their entire life and have nothing invested for retirement.

There is hope if you look fast. Every so often I run across a teacher who handles money the way we do around here. Of course this teacher retires early, as in somewhere in their 30s usually, and then travels the world. When you find one of these gems, you glue your child to this teacher as long as possible. With your responsible spending and investing at home and the teacher at school sending the same message, your child will not be a slave to money. Instead, your child will use money as a tool to live a good and fulfilling life.


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Is a College Education Worth It?




imag0319The cost of a college education has risen faster than inflation for so long the discussion can no longer center on what your major is in college, but whether you should even go at all. We have all heard the statistics on how much more you earn with a college degree which begs the question: How much do you need?

Outside medical, education has seen prices skyrocket more than any other category of spending. According to the College Board, tuition and fees for the 2015-16 school year for state residents of public colleges is $9,410. Out-of-state and private colleges are significantly higher. Add room and board and the cost for the school year is $19,548. Now toss in the cost of textbooks and living expenses and the cost of a college education is a major investment.

There are ways to decrease the cost of an education. Starting at a two-year college and living at home or renting your own apartment versus living on campus can lower the total cost. The one nonnegotiable item is the tuition fee. Scholarships and grants can reduce or even eliminate the cost of higher education except for the time investment.Continue reading

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Renting a Car is Cheaper

img_20161002_101217The debate rages on over renting versus buying a home. Location determines the correct course of action; buying in one city might be a wise financial move, whereas, renting could be better two states over or even across town. Within the same city the best financial course can be different over time.

The debate of buy versus rent is heavily discussed with home buying because of the huge investment. At the end of each discussion someone always says they prefer owning (or renting) so the “best” financial move is not always the course chosen.

What surprises me is how the discussion never moves to other major purchases. Automobiles, for example, are a major investment and are significantly worse expenditures because the car will go down in value, whereas, real estate tends to rise in value, following inflation trends.

Buying a new car might be a good idea with all the current incentives and, in some cases, massive tax credits for electric vehicles. In the cases involving vehicles with tax credits you need to consider your personal tax situation. Generally, tax credits of this kind are non-refundable, meaning you need a tax liability to reduce before the tax credit has value. State credits also play strongly into the decision. For the rest of us, purchasing a car should not be a simple “yes, I need one” decision.Continue reading

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Screw the Rich

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In the market for a freezer? Have I got a deal for you.

The rich are sanctimonious pricks that deserve every insult thrown at them.  Who do they think they are? Just because they didn’t spend every penny they earned and invested their money wisely does not give them the right to be treated like everyone else. Just because they never wasted their money on fancy SUVs, luxury vacations, or kept up with the Jones’s does not give them the right. It does not give them the right! Who are these rich I speak of? Well, anyone with a net worth above zero.

About half of Americans are below the waterline in net worth. These normal people who succumbed to the mass media brainwashing of spend everything you got are the normal people. You, my friend, saved and invested. You are an idiot. If you were poor, like a normal person, you would be treated like a normal person. But, no. You and your almighty attitude of spend less than you earn is as annoying as it is ignorant.

I Can’t Take Anymore

The opening to this post was darn hard to write. It goes against every fiber of my being, yet is the attitude of the majority of people. When you get to see the world from my side of the desk you have the opportunity to see large numbers of people and how they handle their finances up close. You also hear disturbing stories.Continue reading

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Library Millionaire




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This is your new best friend, the librarian at the reference desk.

How would you like a cool $850 every month in your pocket tax-free? Invested in the Vanguard S&P 500 index fund you should be booking around a million dollars in 30 years, assuming historical averages of 7% returns compounded per year after inflation. Okay, I lied. $850 invested every month for 30 years at 7% comes to $1,049,923.39.

But 30 years is a long time to wait for your million dollars. Well, I didn’t say you couldn’t take a bit out of your paycheck and drop it into your retirement account to supercharge your wealth building (and tax savings). Regardless, a free $850 every month in the First National Bank of Wallet is nothing to sneeze at. And anybody can get the free stuff and the money. In fact, the folks handing out the goodies want you to have the money. Who are these crazy people?

Librarians! Yeah, those people you haven’t visited since your junior year of high school have made some changes to the place while you were gone and you might want to check it out.

You know how some businesses can be rude to paying customers. Well, at the library I have never had that experience. These people are happy to see me and allow me to walk out of the place with stuff you would not believe. Sometimes they actually let me keep it forever! And they still have the regular goods you would expect at a library, like books; you know, those thing made of paper, held together with glue, and have pages. The library likes those back after three or four weeks, however.Continue reading

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